On July 19, 2022, Toronto City Council approved an increase in development charges which will cause some development application processes to cost more than $40,000. Residential building charges increased by 46%, while non-residential building charges rose by 40%.
Developers who like to develop a detached or semi-detached home will be charged $137,040, a $43,062 increase over the current development charge of $93,978. The cost for developing a bachelor or one bedroom apartment will rise from $35,910 to $52,367, while the costs for apartments with two or more bedrooms will increase from $55,012 to $80,218. These price increases represent a difference of $25,206.
Non-residential building charges will increase by the smallest amount, from $476.94 to $666.90, a difference of $189.96.
Multiplexes with four or fewer units are exempt from development charges on the second, third, and fourth units on a single property, thanks to an amendment proposed by Councillor Ana Bailo and later approved by Council. These exemptions were suggested to encourage the construction of more missing middle housing.
“We have to be smart about how we use these tools to make sure the growth is happening where we want it to be and that the kind of units we need in the city are the ones that are being built,” Bailão said.
Despite developer warnings that higher development charges, which must be paid when a building permit is issued, would discourage development in the city, the increase is proceeding. Others were informed that the cost would simply be passed on to buyers and renters, further affecting the already unaffordable housing market.
The development charges collected by the City are used to develop sufficient facilities to serve the residents of newly built homes. According to Councillor James Pasternak, these infrastructure projects, which include new libraries, recreation centers, and parks, will eventually increase the value of new homes.
“Many of the developers in the city do not like paying development charges, but they must understand, and I think they do understand, they are more likely to sell their units if people are moving into a fulsome community,” Pasternak said.
Due to a change in provincial law that caused an increase in development costs, the City was obligated to review its current charges. Mayor John Tory acknowledged concerns from housing advocacy organizations and even the City's chief planner, Greg Lintern, who raised the issue of already high building costs, but said there was no other option because the current development charges "don't even begin to pay for the infrastructure that we have to put in place to deal with a growing city."
“What is said here about the fact that this is either eaten by the developers or, more likely, passed on to the ultimate purchasers, whatever that means for the price of the home, is partly true,” Tory said. “But somebody has to pay, in the end, for this infrastructure.”
The new development charges will gradually be implemented over two years to manage the impact on community development. On May 1, 2023, the first half of the increase will go into effect, and the second half will follow a year later.
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